AES DistributedEnergy (AES), a Colorado-based developer of solar energy projects, has confirmed that it will securitize its first portfolio of solar assets for a sum of $100 million, marking the sixth solar securitization of its type in the U.S. to date.
According to Kroll Bond Rating Agency Inc., which has rated the notes, AESs securitization will be comprised of $92.5 million Class A notes and $7.5 million Class B notes. Kroll has rated the larger tranche at BBB (which is just two levels above junk status) and the smaller portion at B five levels below investment grade.
Krolls report also revealed that AES will secure the notes under revenue generated from 1,548 solar assets across six U.S. states, including residential, commercial, industrial and small-scale utility installations. All of the projects have secured long-term PPAs to sell their electricity.
The securitization model is growing in the U.S. solar landscape. Solar installer SolarCity has already completed four such deals, the first in 2013 and the most recent in August, while Sunrun which operates in the same space as SolarCity announced in July a $111 million offering.
"There is a market for it, otherwise there wouldnt be six securitizations," Kroll senior director Cecil Smart told Bloomberg, adding that the relatively small size of AESs and previous solar securitizations was normal for a "market still finding its legs".
Prior to AESs announcement, the five solar securitizations in the U.S. amounted to $560.5 million.
The AES securitization will be issued by Aurora Master Funding, which is a unit of AES, and will become the first deal of its kind to be sponsored by a utility company.